By Peter Hannam

Jon and Katie King were hesitant about adding batteries to complement solar panels on their Randwick home in Sydney's east but, one month after their purchase, they're already considering buying more.

Lithium-ion battery costs have plunged about a fifth in the past year alone and power prices from the grid are soaring, a combination that is rapidly improving the appeal of energy storage for homes and businesses alike.

Katie King at home with her family's new battery system.

Photo: Kate Geraghty

"I'm an advocate in a big way," Mr King, an architect, said. "It's just added another layer of control ... and it's only going to get better."

The Kings' solar panels are slightly under five kilowatts in capacity, supplying about 12-13 kW-hours of electricity a day.

Storage devices for solar panels are beginning to flood the market.

Photo: Pat Scala

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That generation amounts to a "sweet spot", allowing them to dodge the 60¢ per kW-hour of peak prices from 2pm to 10pm and even tap the grid to top up their $8000 Enphase battery system at cheaper power times, Mr King said.

Another benefit is a more engaged energy and environmental experience, Ms King said.

"The amazing software shows us how much electricity we're using, when we're using – it forces us to address our energy usage in a more direct way."

Tsunami building

Solar panels are likely to become more common sights in inner city locations - with storage following close behind.

Photo: Supplied

A survey conducted for the Australian Renewable Energy Agency predicts 20,000 storage systems will be sold this year, roughly triple last year's sales.

The polling of manufacturers, wholesalers and other industry players indicates a similar expansion rate for years to come, reaching between 160,000 and 540,000 systems in 2020 alone, according to figures obtained by Fairfax Media.

"Economics is driving this," John Grimes, chief executive of the Australian Solar Council, said. "This is a transformation that is not going to be led by policymakers."

Wholesale electricity prices have doubled in the past year and gas prices are on course for even larger jumps, encouraging consumers to seek relief.

Mr King estimates his payback period will be seven to 10 years for the batteries, and he aims to go off-grid entirely as prices fall further.

A survey by Ausgrid out last week estimates hundreds of thousands of households could follow suit. Among respondents with solar panels, 50 per cent said they would probably or definitely add batteries in the future, while 2 per cent were in the process of doing so. (See chart below.)

'Black hole money'

Jamie Allen, the Australian business manager for Korean battery maker LGChem, expects the market to as much as quadruple in size this year and next, with a few dominant players emerging.

As unit prices drop, consumers are already opting to spend any savings on buying larger batteries.

A typical system – including 10 kW-hour storage – costs $14,000 to $15,000 with a payback time of seven to eight years.

That compares with no payback period for "black hole money" spent on grid electricity, Mr Allen said. "The financials are really stacking up."

Tim Latimer, national sales manager for inverter supplier Redback Technologies, said early adopters of storage were often seeking greater surety of power after widely publicised outages or curtailments across several states.

With the "perfect storm" now including the prospect of soaring utility prices, big power suppliers were also entering the fray, he said.

EnergyAustralia, one of the big three "gentailers" along with AGL and Origin, last year invested $9.3 million for a stake in Redback.

"We'll have some new investment coming on board in the next few months or so," Mr Latimer said. "EnergyAustralia will maintain the share that they've got, and we'll have some new investment partners coming alongside as well."